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Namibia's Central Bank Emphasizes That Bitcoin And Other Cryptocurrencies Are Illegal

Namibia’s central bank, Bank of Namibia, has has emphasized that Bitcoin and other cryptocurrencies are not legal in the country. Bank of Namibia made the statement through the release of its September 2017, "Position on Distributed Ledger Technologies and Virtual Currencies in Namibia" report.

As a result, no one in Namibia is allowed to accept Bitcoin, and other cryptocurrencies, as payment for goods and services.

"The creation and issuance of currency in a sovereign state is widely considered to be the role of a central authority i.e. central bank or central
government. To this effect, central banks / reserve banks are normally entrusted to fulfil this mandate by issuing currency and ensuring that the value of the currency is intact through monetary policy interventions. In this regard, the Bank of Namibia Act (Act 15 of 1997) as amended (the Act) provides the Bank with the sole mandate to serve as the state’s instrument to control money supply and to
create and issue currency. Section 17 (Monetary units and symbols) of the Bank of Namibia Act states: 'The President may by proclamation in the Gazette determine the monetary units and the symbols to be used for such units which shall, with effect from the date specified in such proclamation, be the currency of Namibia'," states the position paper by the Bank of Namibia.

The Financial Action Task Force (FATF) published a report in June 2014 on Virtual Currencies: Key Definitions and
Potential AML/CFT Risks | Position on Distributed Ledger Technologies and Virtual Currencies in Namibia

The bank in its position paper also makes a distinction between electronic money and virtual currencies. It states that electronic money is a digital representation of legal tender currency.

"In its digital form, e-money still carries its original value equivalent to that of its legal tender currency. Another notable distinction is that the supply of e-money depends on the fiat money in circulation, which is controlled by the central bank, whilst the supply of virtual currencies solely depends on the issuer’s decision or the community that uses or controls the specific virtual currency,".

Added to that, Bank of Namibia states that it does not recognize virtual currencies as foreign currency that can be exchanged for local currency.

"This is because virtual currencies are neither issued nor guaranteed by a central bank nor backed by any commodity," it explains.

There is however a grey area where the bank seems uncertain, it relates to the use of cryptocurrencies in facilitating remittances.

"The Bank however understands that virtual currencies, when exchanged for legal tender / fiat currency can be used to facilitate payment transactions, remittances and many other financial services. However, due to the lack of a legal premise, the Bank is unable to endorse such activities in Namibia at the moment,"

"Like the Namibia Dollar or the South African Rand, virtual currencies cannot be used to pay for goods and services in Namibia. For example, a local shop is not allowed to price or accept virtual currencies in exchange for goods and services,".

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